Phocusright White Paper

PhoCusWright White Paper
Managed Travel 2020:

Technology Drives New
Opportunities
Sponsored by
Written by Norm Rose
PhoCusWright
MARKET RESEARCH INDUSTRY INTELLIGENCE
PhoCusWright White Paper:
Managed Travel 2020: Technology Drives New Opportunities October 2014
This PhoCusWright White Paper is made possible by The International Air Transport Association (IATA)
The International Air Transport Association (IATA) is the trade association for the
worlds airlines, representing some 240 airlines or 84% of total air traffic. We support
many areas of aviation activity and help formulate industry policy on critical aviation
issues. www.iata.org
2014 PhoCusWright Inc. All Rights Reserved. Page i

About PhoCusWright
PhoCusWright is the travel industry research authority on how travelers,
suppliers and intermediaries connect. Independent, rigorous and unbiased,
PhoCusWright fosters smart strategic planning, tactical decision-making and
organizational effectiveness.
PhoCusWright delivers qualitative and quantitative research on the evolving

dynamics that influence travel, tourism and hospitality distribution. Our
marketplace intelligence is the industry standard for segmentation, sizing,
forecasting, trends, analysis and consumer travel planning behavior.
Every day around the world, senior executives, marketers, strategists and
research professionals from all segments of the industry value chain use
PhoCusWright research for competitive advantage.
To complement its primary research in North and Latin America, Europe and
Asia, PhoCusWright produces several high-profile conferences in the United
States and Europe, and partners with conferences in Canada, China and
Singapore. Industry leaders and company analysts bring this intelligence to
life by debating issues, sharing ideas and defining the ever-evolving reality of
travel commerce.
The company is headquartered in the United States with Asia Pacific opera-
tions based in India and local analysts on five continents.
PhoCusWright is a wholly owned subsidiary of Northstar Travel Media, LLC.
2014 PhoCusWright Inc. All Rights Reserved. Page ii

Managed Travel 2020: Technology

Drives New Opportunities
Written by Norm Rose
Introduction
Technology is changing every aspect of our lives, including the way business travel is
planned, booked and experienced. Few would consider modern day business travel to
be hassle-free, but technology is making business travelers more informed and able to
add services that make their trips more comfortable.
Most corporations have long recognized that business travel is one of the companys
largest controllable expenses. In an attempt to manage this spend, corporate travel
managers have created structured programs designed to reduce and control costs by
leveraging volume to obtain supplier discounts. To manage these discounts, corpo-
rations have sought the help of dedicated corporate travel agencies or Travel Man-
agement Companies (TMCs), and have deployed web-based applications known as
Corporate Booking Tools (CBTs).
These traditional ways of managing travel are being disrupted by new technologies
and standards that will change the face of business travel by 2020. These include the
growth of personal device technology, new value-added ancillary travel services and
emerging protocol standards that will provide greater choice of airline products and
drive more personalized offers to travelers.
Purpose of Paper
The purpose of this paper is to examine the impact of technology on the way managed
business travelers purchase airline products and services, predicting what will be the lead-
ing trends by 2020. This paper analyzes disruptive changes happening today and forecasts
how they will impact the managed travel process, the traveler experience and their expec-
tations in the near future, with a focus on airline booking practices. The paper is organized
in four sections:
0 Part One Managed Travelers Embrace Smart Mobile Devices and Expect More Per-
sonalized Services
0 Part Two Technology Driving New Business Practices
0 Part Three Managed Business Travel in 2020 Greater Personalization
0 Part Four Conclusions
2014 PhoCusWright Inc. All Rights Reserved. Page 1

Methodology
IATA Global Passenger Survey
PhoCusWright partnered with IATA, adding 20 unique questions targeting managed travel-
ers to the annual IATA Global Passenger Survey, conducted between July 29 and Septem-
ber 14, 2014. To be included in this section of the survey, the questions targeted travelers
who work for companies that have specific policies regarding travel purchasing and
reimbursement. The respondents needed to verify that their companies used one of these
elements as part of a managed travel program: (1) expense policies (e.g., allowed and
non-allowed expenses); (2) the use of preferred suppliers (e.g., airlines, hotels and car rental
companies); (3) the use of preferred booking channels such as a corporate travel agency/
TMC or a company-provided online booking tool (also known as a corporate booking tool
or CBT).
The survey respondents represent a valid sample of 976 respondents from each of the
major geographic regions of Europe, BRICs (Brazil, Russia, India and China), North America,
Asia Pacific (APAC) and other regions beyond these four categories (see Figure 1).
Interviews with Key Travel Industry Executives

To augment the survey, PhoCusWright conducted 18 detailed telephone interviews consist-
ing of:
0 Five airlines, four full-service carriers (FSC) and one low-cost carrier (LCC).
0 Five TMCs: two global TMCs and three large regional TMCs.
0 Five corporate buyers representing different industries and geographies.
0 Three global travel technology vendors.
These in-depth interviews reviewed current and future trends in the managed travel
sector, providing multiple perspectives on emerging trends impacting the market.
These interviews helped us define the key issues disrupting the managed travel market
today and tomorrow.
Figure 1: Survey Regional Breakdown

Europe 30%
BRICS 30%
North America 18%
APAC 17%
Other Regions 6%
Question: What is your country of residence?

Base: Business travelers (N=976)
Source: IATA Global Passenger Survey
2014 PhoCusWright Inc. All Rights Reserved.

Part 1: Managed Travelers Embrace Smart Mobile

Devices and Expect More Personalized Services
In order to understand how emerging trends will impact managed travel programs in the
near future, it is important to understand the perspective of managed travelers today.
Corporate Travelers are Not Completely Satisfied

One quarter of the respondents said they were very satisfied with their corporate travel
service, and another 44% were only somewhat satisfied (see Figure 2).
Among the 75% who were not completely satisfied or even dissatisfied, the number one
reason was, I can find lower fares and better rates online (see Figure 3).
There is no doubt that the belief that lower prices can be obtained online continues to
be a source of frustration for the managed traveler. With 35% expressing a desire to book
airline reservations directly with suppliers, direct booking creates friction between man-
aged travel goals and business traveler preferences for about one third of travelers.
Managed Travelers Own Smart Mobile Devices

The survey revealed an almost universal adoption of smart devices by managed busi-
ness travelers worldwide (see Figure 4).
Through their smart devices, managed business travelers are now connected 24/7 with
untethered access to travel information.
Managed Travelers Book Airline Reservations through Preferred Channels

More than two thirds (67%) of todays managed travelers book air through preferred
channels. Nearly four in 10 (38%) respondents book their air reservations through their
companys website, 11% have assistants make their reservations electronically for them,
Figure 2: Satisfaction with Corporate Travel Service

Very satisfied 25%
Somewhat satisfied 44%
Neither satisfied nor dissatisfied 19%
Somewhat dissatisfied 9%
Very dissatisfied 3%
Question: How satisfied are you with the current corporate travel service provided by your company/and corporate travel
agency (Travel Management Company/TMC)?

Figure 3: Reasons for Dissatisfaction

I can find lower fares and better rates online 56%
I prefer to book my travel directly with my favorite suppliers 35%
The process is complicated and takes too long 30%
I am unable to buy optional airline services such as better

24%
seats or early boarding
It does not deliver my personal flight preferences 24%
The choices conflict with my supplier preferences (e.g.,

21%
favorite airline, hotel chain)
I am unable to make the reservations using my preferred

13%
device (e.g., smartphone, tablet, laptop)
None of the above 6%
Other (please specify) 5%
Question: Why are you not completely satisfied with your current corporate travel service? Please select all that apply.
Figure 4: Device Ownership

Smartphone (i.e. mobile phone advanced functionality such
as access to the Internet, email capabilities and the ability 95%
to download applications e.g. Apple iPhone, Samsung S5)
Tablet (i.e., portable touchscreen device such as iPad, 76%

Samsung Galaxy, Amazon Kindle Fire)
Desktop/laptop 93%
None of the above 1%
Question: Which of the following devices do you own?


and an additional 18% have their assistants book travel via the telephone (see Figure 5).
Only 15% book their air travel directly on an airline website.
Optional airline services, also known as airline ancillary services, have a higher level
of direct bookings with airline websites, at 22%. Six in 10 respondents have booked
optional airline services.
When asked about their preferred booking methods for air travel products, an interest-
ing shift emerged. Whether booking directly with the airline supplier or with the travel
agency, the desktop/laptop is widely preferred over the smartphone or tablet. Howev-
er, when asked about mobile apps, 39% of respondents stated a preference for book-
ing directly on the airlines smartphone app, compared with only 10% that preferred the
TMC or company-provided app (see Figure 6).
Figure 5: Airline Products Booking Method
Airline tickets Optional airline products/services
Through my company travel agency (TMC) website or my 38%

company-provided website 8%
18%
My assistant calls my company travel agency (TMC) for my
reservations 6%
15%
Directly via the airline website
22%
My assistant makes my travel reservations electronically using 11%

the airline, corporate travel agency (TMC) website or app 4%
Through my company travel agency (TMC) app or my 6%

company-provided mobile app 5%
Online travel agency/portal (e.g., Expedia, 5%

Booking.com, Orbitz) 3%
4%
Directly via the airline app
6%
2%
Calling the airline directly
5%
0%
I never purchase optional airline products/services
40%
Question: Please identify your main method for booking airline products for your business travel. Choose one for each
category Airline Tickets and Ancillary Services.

Figure 6: Preferred Device for Booking Airline Products
Smartphone Tablet Desktop/laptop Not applicable
13%
Directly via the airline website 6%
59%
23%
39%
Directly via the airline app 16%
9%
37%
10%
3%
Through my company travel agency (TMC)
website or my company provided website 66%
21%
21%
Through my company travel agency (TMC) 7%
app or my company provided mobile app 18%
54%
Question: Please indicate your preferred device for booking airline products for business travel. Choose one device per activity.
Seats Dominate Airline Ancillary Services

Nearly half (49%) of managed travelers ranked preferred seating/extra legroom as the most
important airline ancillary service. Highly ranked second place choices were fast-track secu-
rity screening (18%), lounge access (16%) and early boarding (17%) (see Figure 7).
With a large percentage of corporate travelers already at a high frequent flyer status
level, some ancillary fees such as baggage charges and preferred seating are less of
an issue, since they are often complimentary. The pain point is the infrequent travelers,
where these fees have the greatest impact (see Figure 8).
Nearly three in 10 (28%) respondents book ancillary airline services directly on the
airline website (see Figure 9). Today, there are major challenges with selling ancillaries
at the travel agent point of sale (POS). POS capabilities are emerging, and may shift the
sale to the TMC. CBT displays will also need to be adjusted to accommodate ancillary
services at the point of sale.

Figure 7: Airline Ancillary Services Importance Ranking

1st rank 2nd rank 3rd rank 4th rank 5th rank
Statement not chosen I do not purchase optional airline products/services
Preferred seating/extra legroom 49% 12% 11% 7% 4% 10% 7%
Fast-track security screening 13% 18% 18% 11% 9% 10% 21%
Lounge access 12% 16% 14% 13% 10% 10% 25%
Early boarding 6% 17% 13% 11% 12% 10% 32%
Checked bag fees 4% 5% 7% 9% 10% 10% 57%
Onboard entertainment (e.g., movies, games) 2% 8% 8% 14% 14% 10% 44%
In-flight Wi-Fi 2%4% 6% 7% 12% 10% 59%
Onboard meals 2% 11% 13% 17% 19% 10% 29%
Question: Please rank the airline ancillary services below in order of importance to you (1 = most important, 2 = somewhat import-
ant, 3 = neutral, 4 = less important, 5 = not important) when traveling for business?

Figure 8: Airline Ancillary Services Payment
Complimentary based on My company reimburses me I personally pay for these services Not applicable
my frequent flyer status
43%
Preferred seating/extra legroom 13%
22%
22%
55%
Early boarding 5%
12%
28%
31%
25%
Onboard meals
12%
32%
43%
5%
Expedited security screening
12%
39%
49%
7%
Lounge access
20%
24%
30%
4%
Onboard entertainment (e.g., movies, games)
18%
47%
12%
16%
In-flight Wi-Fi
22%
50%
30%
38%
Checked bag fees
11%
22%
Question: Please indicate which statements are true regarding how you pay for ancillary services when traveling for business.
Check all that apply.

Figure 9: Preferred Methods for Purchasing Ancillary Services

Directly via the airline website 28%
Through my company travel agency/TMC and/or my 26%

corporate online booking tool
I would prefer that all optional airline products/services be 24%

bundled into my ticket price
Directly via the airline website/app on my smart device 18%
(smartphone or tablet)
From a kiosk at the airport 3%
Calling the airline directly 1%
Other (please specify) 0%
Question: How would you prefer to purchase ancillary services for your next business trip?
Figure 10: Changing the Airline Booking and Communication Experience

I will make the majority of airline arrangements on my mobile phone 46%
I will interact with electronic messages sent to my mobile device

at every point of my journey; these messages will be personalized 44%
to my preferences and offer trip advice
My mobile device will strore my preferences and my airline 42%

will use those preferences to book my reservations
My mobile device will automatically change all my reservations 38%

(e.g., air, car, hotel, etc.) when I change my flight schedule
My mobile device will notify designated contacts in my business 31%

and personal social networks when my flight schedule changes
I see little change in my airline experience 24%
I will use wearable computers (e.g., smartglasses, smartwatches)

that will transmit my preferences, improve the efficiency of the 19%
process and offer personalized services
I believe the airline experience will get worse due to more

0%
weather delays, crowds and technology failures
Question: How do you see the airline experience changing for your business travel over the next 3-4 years? Choose all that apply.

Travelers Expect More Automation and Personalization

Managed business travelers expect that 46% of airline bookings (up from less than 10%
today) will be made via the smartphone within 3-4 years (see Figure 10). They also an-
ticipate interaction with electronic messages sent to their mobile device at every point
during the journey. Managed business travelers are expecting personalized service at
all touchpoints, and that their preferences will be stored on their mobile device.
Nearly half of respondents (45%) would like to have their preferences stored and their
flights automatically booked based on these preferences (see Figure 11). The managed
traveler expects technology solutions that anticipate weather delays and automatically
rebooks or provides alternatives.
The managed traveler is also looking for automated ways to change flights when their
itinerary changes, or when flights are late or cancelled (51%) (see Figure 12). Managed
travelers want greater integration with calendar appointments (26%). There is some inter-
est in optional services such as hotels, cars, restaurants or ground transportation (11%).
Figure 11: Top 3 Ways to Improve Booking, Purchase and Pre-Flight Experience
1st Choice 2nd Choice 3rd Choice
Store my preferences and automatically book 45%

my desired flights, seats and optional airline 14%
products/services 17%
22%
Anticipate weather delays and automatically 24%
rebook or provide alternatives
24%
18%
Automatically rebook my flight if I have a 33%
change in my flight schedule
25%
7%
Automatically rebook all related itinerary
elements (e.g., hotel, car rental) when my 21%
flight schedule changes 27%
Question: Please select the top three ways (1 = top choice, 2 = second choice, 3 = third choice) airlines could improve your
booking, purchase and pre-flight experience when traveling for business?

Figure 12: Top 3 Booking Capabilities on Website or App

1st Choice 2nd Choice 3rd Choice
Automatically rebook me on alternative flights 51%

based on my preferences if my itinerary changes or 28%
my flights are late or cancelled 12%
26%
Automatically book my airline reservations based on 21%
my calendar appointments and preferences
17%
11%
Allow me to book optional services such as hotels, 28%
cars, restaurant meals or ground transportation
30%
6%
Book my airline reservations via voice-enabled
personal assistant (e.g., Siri, Google Now) 9%
14%
4%
Allow me to shop for and purchase tickets for
local events and activities at my destination 11%
25%
Question: Please select the top three (1 = top choice, 2 = second choice, 3 = third choice) booking capabilities you would like to
see available on your mobile airline web or app over the next 3-4 years.

Part 2: Technology Driving New Business Practices

Managed Travel is a Continuum of Policy Enforcement
The managed travel market is often grouped into three categories: tightly managed,
moderately managed and lightly managed with respect to policy enforcement. These
traditional categories are not distinct segments, but actually represent a full continuum
of company profiles (see Figure 13).
On one end companies enforce strict travel policies, often limiting expense reimburse-
ment if the traveler violates any aspect of the policy. These are generally larger com-
panies, but smaller firms may have equally strict policies. Tightly managed programs
often deploy specific Key Performance Indicators (KPIs) that closely monitor travel
policy performance and traveler behavior.
At the other end of the continuum are companies that publish travel guidelines and
often lack measures to track policy compliance. Specific industry types and overall
corporate culture often influence where a company fits on this spectrum. For example,
industry sectors that need to abide by strict rules and controls such as the financial
services industry are more likely to embrace tightly managed travel policy practices. On
the other hand, high tech companies with a strong entrepreneurial spirit may opt more
for guidelines rather than strict policy control.
The largest segment of companies falls into the moderately managed category. Within
this group the level of enforcement may vary based on type of policy violation. There
are also differences across regions and countries, where local culture and customs can
impact the way corporate policy is enforced. In emerging markets or for smaller corpo-
rations, policies tend to gravitate toward the lightly managed end of the continuum.
Technology is Driving New User Behaviors and Business Practices

When the Internet went mainstream in the mid to late 1990s, a new level of transpar-
ency emerged that allowed corporate travelers to shop supplier and online travel
agencies against corporate negotiated fares and rates. This created a level of friction in
which travelers often questioned the value of managed programs. As a result, the need
for ongoing travel education became a constant effort for most corporate travel
Figure 13: Managed Travel Continuum of Policy Enforcement
Tightly Managed Moderately Managed Lightly Managed

managers who must justify their programs to corporate travelers and senior manage-
ment, many of whom are often frequent travelers themselves.
The introduction of the iPhone in June 2007 was a watershed moment for the man-
aged travel industry, though few recognized it at the time and many are still struggling
to manage the rapid adoption of smartphones by their corporate travelers. Of equal
significance was the introduction of the iPad in 2010, which often augments or replaces
the travelers laptop. The spread and dominance of Google Android phones and tab-
lets has also accelerated mobile smart device adoption worldwide.
In the traditional corporate travel environment, compliance is driven by rules enforced

by the TMC or embedded in the CBT. In todays app-centric smart device world, com-
pliance is more challenging as the temptation to find and book alternatives has been
super-charged by the ability to do this anywhere, anytime, on multiple devices. Clearly,
smart devices have given birth to a new kind of corporate traveler, one who is more
demanding, looks for instant answers and expects more personalized services.
Technology is Adding Complexity to the Managed Travel Ecosystem

The goal of a managed travel program is to direct travelers to book using the preferred
booking channel. Traditionally that has been the TMC or CBT, and more recently a pre-
ferred TMC or company mobile website or app. However, many corporations and TMCs
have still not deployed a mobile web or app dedicated to the managed travel program.
This preferred channel has been challenged by direct supplier contact, either through the
airline call center or based on airline loyalty programs. The web added additional options
for searching airfares. This resulted in friction with the preferred booking channel.
The growth of smart devices has extended access to OTAs, airline direct, metasearch
and social media 24/7, anywhere. The emergence of value-added ancillary airline
services also added more optional airline services (see Figure 14).
The Impact of Technological Change on the Managed Travel Airline

Ecosystem Today
Personal mobile technology is driving change worldwide. This includes parts of the
world where mobile device ownership has had a leapfrog effect, with smart devices
empowering segments of the population that never owned a desktop or laptop PC. As
mobile bandwidth increases and devices continue to become more powerful, the sheer
amount of information that is accessible via a mobile smart device is staggering. The
managed travel sector is struggling to keep up with this rapid change.
Lack of Mobile Strategy and BYOD

From a corporate travel management perspective, this brave new world of mobile
smart device computing is challenging the enterprise. Even the most advanced corpo-
rate travel managers struggle with developing a comprehensive mobile strategy. In a

Figure 14: Managed Travel Airline Ecosystem Web, Mobile and Value Added Ancillaries
TMC Travel Agent
Web
App
Managed
CBT
Business Web
Traveler Airline
App
OTA & Metasearch Web
App
Airline Direct Airline Agent
Web
App
recent Carlson Wagonlit global survey on top travel priorities for 2014, only 38% of trav-
el managers with global responsibility ranked mobile as a high priority. Specific regions
had even lower mobile strategy priorities, such as EMEA with 21% of travel managers
stating that mobile was a strategic priority for 2014.1 This effort has been significantly
complicated by the corporate trends that allow travelers to Bring Your Own Device
(BYOD). In a BYOD environment, corporate travel managers lack visibility into mobile
travel app usage. Some companies dictate what apps are allowed on mobile devices,
while many do not (see Figure 15).
Open Booking
The concept of Open Booking has been a hot topic over the last two years. The prem-
ise of Open Booking, also referred to as Managed Travel 2.0., is simple: Companies set
targets for trips, and allow travelers complete freedom to book through any channel
based on meeting or beating the benchmark. Managed travelers are then incentivized
to find lower rates and must share their itineraries with the company in order to support
corporate duty of care requirements. Various tools have emerged to capture out-of-
channel bookings made directly with suppliers. Because Open Booking technology can
capture out-of-channel bookings into the managed program, it benefits all enterprises,
even those that dont want to implement an Open Booking policy.
1 CWT Reveals Top Travel Priorities for 2014, Carlson Wagonlit Travel press release (January 30, 2014).

Figure 15: The Impact of Technology and Disruptive Trends on the Managed Travel
Airline Ecosytem
TMC Travel Agent
Web
App
Managed
CBT
Business Web
Traveler NEW ENTRANTS

App Airline
OTA & Metasearch Web
App
OPEN BOOKINGS
Airline Direct Airline Agent
Web
App
MOBILE DEVICES + NEW COMMUNICATION PROTOCOL
Impact of New Entrants

Travel innovation is often driven by startups that provide innovative approaches to
travel planning and purchasing. As more companies provide Application Programming
Interfaces (APIs) to their travel applications and platforms, new entrants will continue to
emerge, disrupting the way managed business travel is booked and experienced. This
was evident in a 2013 Hackathon held by British Airways on flight 9120, which flew from
San Francisco to London overnight, filled with 130 members of the tech community
and a select number of BA frequent travelers.2 Similar hackathons (though not in the
air) by American Airlines, Sabre and industry media outlets such as Tnooz are constant-
ly pushing the industry to tap the entrepreneur to improve the technology behind travel.
New entrants such as Rocketrip, a venture-funded new booking platform that uses
employee incentives to drive compliance, and TripScanner, a browser-based, Open
Booking enterprise tool targeted at small and midsize businesses, are two examples of
new entrants disrupting the managed travel ecosystem today.
2 Zoe Fox, The Hottest Spot for Hackathons? 30,000 Feet in the Air, Mashable (June 13, 2013).

XML
The underlying communication platform for travel is also changing. The Electronic Data Inter-
change for Administration, Commerce and Transport (EDIFACT) is an international electronic
interface standard (EDI) developed under the United Nations back in 1987.3 This protocol
was designed to allow the easy interchange of information across disparate systems.
In February 1998, the World Wide Web Consortium (W3C) published its first version of
an Extensible Markup Language XML (1.0.). Dr. Charles Goldfarb, an IBM researcher
who was personally involved with the invention of XML, claims it to be the holy grail
of computing, solving the problem of universal data interchange between dissimilar
systems.4 XML has changed the way information is exchanged between systems. By
definition, XML is extensible, which means it can be expanded to increase the amount
of information exchanged between systems.
Some of the communication in the travel ecosystem has been converted to XML, but
EDIFACT communication has remained the primary protocol for the majority of airline
communication. A new airline XML standard is being introduced that allows for greater
product differentiation, customized offers and efficient servicing of customer preferenc-
es, responding to the very heart of the disruptive change driven by managed traveler
expectations.
Part 3: Managed Business Travel In 2020 Greater Personalization

In 2020, managed travelers will experience greater automation that reduces trip fric-
tion, will have access to more transparent information and will receive personalized
services for all aspects of the trip.
Emerging Technology Will Cause Further Transformation

With the dominance of smartphones and tablets in the hands of managed travelers
and the transformational nature of these devices, air shopping and purchasing will
continue to move to mobile by 2020. New personalized services will be facilitated by
intelligent assistants and will be available on a variety of wearable technology.
Personalized Services
By 2020, the managed travel ecosystem will seamlessly integrate traveler service pref-
erences with expanded airline services to meet ever evolving managed traveler expec-
tations. New communication protocols and the ability to track and measure customer
preferences throughout the journey will be imbedded into the process. Big Data will be
used to better match services with the preferences of travelers, anticipating their needs.
Wearable Technology
Wearable technologies will augment services provided by current mobile smart devic-
es. These include smart watches and glasses that provide an easier hands-free comput-
ing environment. By 2020, the adoption and impact of wearable technologies will likely
provide an added level of efficiency to the managed travel experience with increased
3 United Nations Economic Commission for Europe

4 Tim Anderson, Introducing XML, (January 2004).
use of augmented reality (AR), delivering real-time travel advice and offers to the man-
aged traveler. Wearable technologies will be in wide use by airline service personnel,
enabling the delivery of more personalized services.
Intelligent Assistants
Today, intelligent assistants such Siri, Google Now and Cortana have limited ability
to substantially support travelers. By 2020, intelligent assistants will be able to handle
more complex tasks. Specific intelligent assistants for travel (i.e., intelligent travel assis-
tants or ITAs) will be introduced that will automatically update itineraries during disrup-
tions and recommend services to travelers en route. This technology will help meet the
2020 managed travelers expectations for more automated services.
Disruptive Business Practices Will Impact Airline Purchasing Practices

Open Booking and the Capture of Information from all Channels
Open Booking will gain momentum, but will likely only be adopted by certain types
of companies whose corporate culture supports this approach. The exact size of the
Open Booking segment is hard to predict, as generational shifts may alter corporate
culture and thus drive more acceptance of the Managed Travel 2.0 approach.
The ability to capture out-of-channel bookings will be widespread by 2020, enabling

travel managers to look at all their travelers reservations and apply policies to any out-
of-channel bookings. This means that whether companies completely embrace Open
Booking or simply use the tools to capture out-of-channel bookings, managed travel in
2020 will capture all reservations from all channels.
The Airline as a Retailer

Airline merchandising technology will enable specific a la carte or bundled ancillary
offers that match customer preferences. Some airlines will use the merchandising plat-
forms to dynamically bundle ancillary services based on the value of the passenger and
the overall corporate client relationship.
In addition to todays focus on seats, boarding and Wi-Fi, some creative ancillaries are
emerging, including pre-purchase of online meals, flexibility in ticket rules (e.g., ability
to change at a reduced fee) and customized in-flight entertainment delivered on per-
sonal mobile devices. The airlines are hard at work creating a la carte and bundled an-
cillary offers involving merchandise, complementary travel services (e.g., hotel, ground
transportation) and even branded apparel. Corporate negotiated ancillary bundles will
likely become part of an overall airline negotiation strategy.
By 2020, airlines will be able to provide a unique set of services for each reservation
request, and a tailored response based on customer insights. Corporate relationships
and discounts will likely still be in place for large companies, but by 2020, unique
airline-controlled offers will be part of the ecosystem as well. This shift in the way the
airline offer is created will be enabled by widespread adoption of the New Distribution
Capability (NDC), an XML data exchange standard, facilitated by IATA.

Part 4: Conclusions
Predicting the future based on todays technology can be challenging. Major change
is often facilitated by innovations which in turn create disruptive business models. For
example, Uber would not be possible without the smartphone. Understanding how tech-
nology will fuel disruptive models is the key to understanding managed travel in 2020.
From the travelers point of view, the message is clear: Managed business travelers
want personalized services that reduce travel friction and match their preferences. They
expect automation to seamlessly handle itinerary changes.
In six years we may see moderate change in managed business practices, or a new
era that looks dramatically different than it does today. What will dictate the level of
change is how the emerging ecosystem embraces new technology, understands travel-
er behavior and meets expectations.
For tightly managed business travel, new tools will likely emerge to create even greater
control over the traveler through their mobile device. The question is: How big is the
tightly managed segment? Our research indicates that the tightly managed business
segment is no more than 15-20% of the market. This leaves 80% of the market vulnera-
ble to disruptive trends and technology (see Figure 16):
Figure 16: Managed Travel Airline Purchasing Disruptors 2020
Personalized Messages Dynamic Offers & Bundles
Tightly Managed Moderately Managed Lightly Managed
Generational Shifts Open Booking

0 Generation Shifts Millennials moving into senior management positions will likely
bring their self-service, instant gratification expectations to their roles, influencing
the entire corporation to be more proactive in providing personalized travel services.
0O
pen Booking Managed Travel 2.0 will likely take hold with some moderately and,
certainly, lightly managed companies. As tools to capture out-of-channel bookings
improve, and as TMCs evolve to support fragmented itineraries, Open Booking will
likely be mainstream for a portion of the market.
0P
ersonalized Messages By 2020, personalized messages will be driven by Big
Data analytics. The fear of being bombarded with unwanted requests is real, but
if the offers are truly personalized, managed business travelers will recognize their
benefit and thus embrace the process.
0D
ynamic Offers and Bundling The airlines are implementing systems to drive
personalization to all travelers in the form of dynamic offers and unique bundles.
The Role of NDC as an Enabler of Transformation

Often the role of technology in disruption is misunderstood. Apples iPod did not
disrupt the music industry. MP3 players already existed. It was iTunes, the business
strategy that was the true disruptor. Smart devices are impacting every industry, but
the business models around the technology are truly transformative. Travel is prone
to disruptive business models, enabled by mobile smart devices by the very nature of
the mobility of its customers. But just as with iPod versus iTunes, it will be the business
models created from new technology that likely will drive greater change for the man-
aged travel industry.
The underlying technology enabler for travel distribution transformation is NDC, which
at its heart is simply an XML standard. Given that XML is already used by all players in
the ecosystem, the emerging business models will likely be the catalyst of change.
The NDC Standard will enable the travel industry to transform the way air products
are retailed. The goal is to allow a greater and richer amount of information to flow
from the airlines throughout the entire ecosystem. NDC will provide airlines with the
capability to dynamically create customized products and services, regardless of the
channel through which the reservation is being made. The airlines role in payments
may change for those who choose book direct via an Open Booking policy, where
airlines will accept and process payment, directly rather than through a TMC or corpo-
rate charge card. By 2020, this will likely be via mobile payment services, making this a
seamless experience.

When new business models are created, there is always a fear that existing relation-
ships and roles may be altered, impacting the current stakeholders. There is a valuable
and separate role for each ecosystem player in a 2020 managed travel world enabled
by NDC. Change is inevitable, and it is ultimately the responsibility of the stakeholder
to adapt. In 2020, whether you are a TMC, technology provider or corporate travel
manager, you must add value to customers, partners and suppliers. The managed
traveler is ultimately pushing this change for more personalized offers and services. To
meet this challenge, all parties should cooperate in utilizing information and providing
services that best reduce friction for the managed traveler, while helping the corpora-
tion manage its overall travel expenses.

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PhoCusWright White Paper

Managed Travel 2020:

2014 PhoCusWright Inc. All Rights Reserved. Page i

PhoCusWright delivers qualitative and quantitative research on the evolving

PhoCusWright is a wholly owned subsidiary of Northstar Travel Media, LLC.

2014 PhoCusWright Inc. All Rights Reserved. Page ii

Managed Travel 2020: Technology

2014 PhoCusWright Inc. All Rights Reserved. Page 1

Interviews with Key Travel Industry Executives

0 Five corporate buyers representing different industries and geographies.

0 Three global travel technology vendors.

Figure 1: Survey Regional Breakdown

North America 18%

Question: What is your country of residence?

2014 PhoCusWright Inc. All Rights Reserved. Page 2

Part 1: Managed Travelers Embrace Smart Mobile

Corporate Travelers are Not Completely Satisfied

Managed Travelers Own Smart Mobile Devices

Managed Travelers Book Airline Reservations through Preferred Channels

Figure 2: Satisfaction with Corporate Travel Service

Somewhat satisfied 44%

Neither satisfied nor dissatisfied 19%

2014 PhoCusWright Inc. All Rights Reserved. Page 3

Figure 3: Reasons for Dissatisfaction

I prefer to book my travel directly with my favorite suppliers 35%

The process is complicated and takes too long 30%

I am unable to buy optional airline services such as better

It does not deliver my personal flight preferences 24%

The choices conflict with my supplier preferences (e.g.,

I am unable to make the reservations using my preferred

None of the above 6%

Other (please specify) 5%

Figure 4: Device Ownership

Tablet (i.e., portable touchscreen device such as iPad, 76%

None of the above 1%

Question: Which of the following devices do you own?

2014 PhoCusWright Inc. All Rights Reserved. Page 4

Figure 5: Airline Products Booking Method

Airline tickets Optional airline products/services

Through my company travel agency (TMC) website or my 38%

My assistant makes my travel reservations electronically using 11%

Through my company travel agency (TMC) app or my 6%

Online travel agency/portal (e.g., Expedia, 5%

2014 PhoCusWright Inc. All Rights Reserved. Page 5

Figure 6: Preferred Device for Booking Airline Products

Smartphone Tablet Desktop/laptop Not applicable

Seats Dominate Airline Ancillary Services

2014 PhoCusWright Inc. All Rights Reserved. Page 6

Figure 7: Airline Ancillary Services Importance Ranking

Preferred seating/extra legroom 49% 12% 11% 7% 4% 10% 7%

Fast-track security screening 13% 18% 18% 11% 9% 10% 21%

Lounge access 12% 16% 14% 13% 10% 10% 25%

Early boarding 6% 17% 13% 11% 12% 10% 32%

Checked bag fees 4% 5% 7% 9% 10% 10% 57%

Onboard entertainment (e.g., movies, games) 2% 8% 8% 14% 14% 10% 44%

In-flight Wi-Fi 2%4% 6% 7% 12% 10% 59%

Onboard meals 2% 11% 13% 17% 19% 10% 29%

2014 PhoCusWright Inc. All Rights Reserved. Page 7

Figure 8: Airline Ancillary Services Payment

2014 PhoCusWright Inc. All Rights Reserved. Page 8

Figure 9: Preferred Methods for Purchasing Ancillary Services

Through my company travel agency/TMC and/or my 26%

I would prefer that all optional airline products/services be 24%

From a kiosk at the airport 3%

0 Five corporate buyers representing different industries and geographies.

0 Three global travel technology vendors.

3 United Nations Economic Commission for Europe